Industry view: Decommissioning worth £30bn over next 25 years
Published: 30 Jan 2015
By Ivor Ecclestone, projects director, Magma Products
The oil and gas industry is, of course, still looking to maximise hydrocarbon recovery in the North Sea. Exploration work is ongoing, existing assets are being revitalised and fresh developments are materialising. Construction work is far from over yet – huge new installations will soon be added to the offshore infrastructure.
Amid this welcome push to make the most of the huge opportunity the UKCS continues to offer, however, the industry is in no doubt about the next ‘big thing’: decommissioning.
Until now it's an issue that has been pushed back, in line with the strategic pursuit of life extension. But because of the magnitude and complexities of the decommissioning process – and the consequent need for long-term planning – it's imperative that as decommissioning commences lessons learnt are shared between operators.
Decommissioning, of course, is already here. We’ve supported a succession of projects in recent times. In one instance, we applied engineering consultancy and service support to the decommissioning of a major gas field in the southern North Sea, and are gearing up to do likewise with two further projects in 2015.
Our focus is primarily upon planning and delivering effective flushing, cleaning and barrier testing operations for infrastructure ranging from subsea systems to topsides process systems. In essence, we deploy bespoke large-scale pumping and testing equipment along with state-of-the-art analytical equipment to ensure acceptable isolations and cleanliness levels are achieved before removal or abandonment work goes ahead.
In executing this work – indeed, in being ahead of the game when it comes to developing specialist decommissioning services – we've gained a first-hand insight into the key issues involved. At the same time, we've developed practices and processes to overcome them. Those issues, in our experience, revolve around the need for clear and comprehensive procedures, and a lack of appreciation for the breadth and scale of resource requirements for an individual project.
The decommissioning of even a small platform – bearing in mind a wider infrastructure that may typically encompass tie-backs and several subsea well assemblies – is, by any measure, a significant undertaking.
To view it strategically, decommissioning ought to be treated using the same processes and controls as any oil and gas industry project – the same planning principles, the same consideration of resources and logistics issues.
For companies like Magma Products, the benefits of making an early move into the decommissioning sector are becoming ever more apparent. It's a fast-growing area of activity for us as clients recognise we're developing a pool of specialist knowledge and experience few others possess.
The scale of the market, and the accompanying opportunities, are equally evident: it's broadly estimated that the value of the sector sits at around £30billion over the next 25 years, and it's likely to create and sustain over 35,000 jobs – many of those filled by people migrating from the declining upstream sector.
In fact, the latest Decommissioning Report by Oil & Gas UK (OGUK) predicts annual spending on decommissioning projects will average £1.5bn over the next 10 years.
It's a unique market, and one that requires supply chain companies to be flexible. We've recognised the value of creating a hub of decommissioning expertise – one that understands the challenges involved and, equipped with project management and technical engineering expertise, is well positioned to overcome them. We’re not alone in this arena and others will surely follow suit.